Wedbush Securities maintains that structural moats for Unity Software (U) and AppLovin (APP) remain intact following the launch of CloudX. The new AI-infused startup is widely perceived as a threat to the established mobile advertising stack.
Unity shares declined significantly over the past week as investors weighed the potential for generative AI to disrupt core business models. Wedbush characterizes the recent pressure on the mobile ad ecosystem as a mix of warranted repricing and indiscriminate selling.
The entry of CloudX specifically challenges the durability of Unity’s walled garden approach to advertising auctions. Wedbush analysts argue that Unity retains long-term competitive advantages despite these emerging technological challenges.